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The Kudrin-Medvedev situation is getting critical very quickly. This morning Medvedev called out Kudrin at a public meeting in Stalingrad -- I mean, Tsaritsyn ... I mean, Volgograd:

"Such statements appear improper … and can in no way be justified. Nobody has revoked discipline and subordination,” an angry and stern Medvedev told Kudrin at a meeting of officials in the central Russian city of Volgograd. "If, Alexei Leonidovich, you disagree with the course of the president, there is only one course of action and you know it: to resign. This is the proposal I make to you."

To which Kudrin replied: “Yes, it is indeed true that I have disagreements with you. I will take a decision on your proposal and will consult with the prime minister" [Putin]. In other words: Daddy has to decide this one.

Now Andrew Osborne (@A_osborne) just tweeted: "Russian finance minister #Alexei Kudrin falls on his sword after an insulted President Dmitry #Medvedev pushes him #russia stability?"

Then later: "Kudrin says he resigned, Medvedev’s people that he was fired. kudrin started it anyway and must have known what he was doing."

Medvedev can’t fire Kudrin. Putin can. I haven’t seen any statement from Putin, so stay tuned.

FWIW, the ruble is down about 1.3 percent vs. the dollar now, after being down about .8 percent before I heard the Kudrin resignation news. But the dollar strengthened generally during that interval (having been down against the euro earlier in the day, but up now).

This will be something to watch. Would Putin throw Kudrin under the bus? Was there some grand bargain between Medvedev and Putin that ensured that the former would cede his job to the latter, and Kudrin is the odd man out in the deal? Osborne thinks that Kudrin is playing it smart here–maybe he’s going for broke because he has no alternative.

The interesting thing going forward is how this affects the balance of power going forward, or put differently, whether this presages a broader struggle for position among the elite. Like I’ve said many a time, Putin’s job is to balance contending factions within the state. Is that balance changing? Will he be able to restore a new equilibrium? How vulnerable is the balance to external shocks, of which there are likely to be many?

Video of the cage match here:

Source: Russian Finance Minister's Resignation Sends Ruble Downward, Dollar Up